By KENNEDY MUPESENI and CHATULA KANGALI –
AS Finance Minister Situmbeko Musokotwane prepares to present the 2024 national budget on Friday, stakeholders are highly expectant about changes in key sectors of the economy to facilitate growth.
Their submissions have been on the need for the Government to support mineral explorations, galvanising the upcoming manganese, gold and lithium industries as well as provide fiscal and tax incentives to lower further the cost of doing business in the country.
For instance, the Centre for Trade Policy and Development (CTPD) anticipates substantial allocation to critical economic sectors that will boost the country’s economy.
CTPD researcher for public finance, Matrina Mumba says in the think-tanks position paper that for the Zambia Revenue Authority (ZRA) to strengthen its tax administration and enforcement capabilities, more funding to the tax collector is needed.
In the energy sector, Policy Monitoring and Research Centre (PMRC) has proposed enhancing promotion of green technologies and innovations by coming up with a policy and legal framework for climate change adaptation and mitigation for a green growth strategy.
It has observed in its submission towards the 2024 national budget framework that the absence of affordable green technologies and innovations have hindered climate change adaptation in Zambia while limiting access to clean energy.
In the tourism sector, the Hotel and Catering Association of Zambia (HCAZ) is looking forward to streamlining the licensing and fee structure in the hotel and tourism industry.
HCAZ president Christopher Nsenje says that: “There are too many licences and fees which makes the industry uncompetitive and we would like to see measures to stabilise the local currency which will in turn have a positive effect on the cost of fuel in the country.”
The Good and Services Suppliers Association of Zambia (GSSAZ) is calling for the decentralisation of public procurement in the 2024 national budget.
Association president Blackson Singoyi is of the view that procurement of goods and services is centrally conducted in Lusaka, adding that the decentralisation would promote accountability and transparency in public procurement.
On the other hand ,the Zambia Consumer Association (ZACA) wants the budget to have a broader representation of all sectors of the economy to respond to the needs of consumers.
Executive secretary Juba Sakala says the 2024 budget needs to be responsive to the needs of consumers while increasing funding to the agriculture sector to overcome high food prices in the country.
In the same vein, the Small and Medium Enterprises (SMEs) Association of Zambia urges the Government to clearly segment businesses which non-citizens can engage in under the 2024 budget.
Board chairperson, Daimone Siulapwa states that non-citizens should not be allowed to engage in minor businesses such as operating taxis, home stalls, backyard poultry and block making.
Others like the the Civil Society Organisations (CSOs) under the Zambia Tax Platform (ZTP) and CTPD have proposed that the 20 per cent withholding tax on the gaming and betting industry should next year be returned as a way of increasing revenue collection.
The CSOs have also proposed the introduction of punitive measures to businesses for failure to use
Electronic Fiscal Devices (EFDs). The consortium sees the gaming and betting industry as a potential area for revenue mobilisation.
In the 2023 national budget, the government reduced withholding tax on winnings from gaming and betting to 15 per cent from 20 per cent respectively.
The Government’s planned raising of production from the current average 800,000 tonnes of copper per annum in the next decade is a big mountain to climb, hence stakeholders want the Government to come up with bold steps to facilitate mining expansion.
Kitwe District Chamber of Commerce and Industry (KDCCI) among other industrial players wants the Government to fully support Artisanal, Small Scale Mining (ASM) to the fullest in the 2024 national budget.
“We expect the Government to announce more incentives for the ASM sector and ensure that gold mining sites like Kasenseli start operating so as to contribute to the economy of the country,” KDCCI president Emmanuel Mambiko says.
While acknowledging that the 2022 and 2023 budget measures show that the Government clearly understands what investors need to commit to Zambia, the Zambia Chamber of Mines (ZCM) is requesting for more tax incentives.
ZCM is looking forward to more fiscal and tax incentives, which of course may not sit well with players in other service who feel that the mining investors already have enough incentives.
“Amending the mineral royalty tax further to be calculated on an incremental or sliding scale basis will bring Zambia’s tax regime into competition with other leading mining countries,” ZCM chief executive officer Sokwani Chilembo submits.
Mr Chilembo states that the Zambian tax rates are higher than most of the competitors except the Democratic Republic of Congo
(DRC).
“We are pleased to see the Government continue to follow through on its promise to reform some of these impediments to growth,” he says.
Mr Chilembo says further tax incentives will have a positive impact on the Zambian mining industry and, by extension, for the country’s economic trajectory.
“When the mining sector succeeds, so does Zambia, and we look forward to seeing this new chapter in the country’s history unfold,” he said.
Mr Chilembo says the Zambian Government’s ambitious objective of expanding copper production to three million tonnes per year will not be met by a ‘business as usual’ approach, as Zambia is competing for capital with the rest of the world.
He states that the initial changes to the mining tax regime in the 2022 budget and further changes under the 2023 budget are the critical first steps on the road towards fulfilling this objective.
Mr Chilembo notes global consensus is that demand for copper will remain strong over the coming decade, primarily because of the metal’s utilisation in new ‘green’ technologies such as electric vehicles.
An additional nine million tonnes of copper per annum will be required by 2040, to keep pace with demand.
He says the copper price reverting to about $8,100 per tonne will be in line with this fair and conservative forecast.
Mr Chilembo adds that shared fundamentals make similar revision of the nickel price of about $24,300 a fair and conservative forecast as well.
Hence, he says Zambia must take advantage of the period of sustained copper and nickel demand, if it is to change its development trajectory.
On the other hand, Zanaco chief risk officer Mutisunge Zulu has called for an urgent need to provide more incentives to the mining sector to encourage mineral exploration.
“We need to encourage mineral exploration, exploration is very important in achieving copper production targets and the economy through increased mining tax receipts,” Mr Zulu says.
The Zambia Association of Manufacturers (ZAM) wants more pronouncements on mining local content to boost the participation of local people in the mining supply value chain.
“We need to heed pronouncements on local content, the involvement of local enterprises in the mining value chain is very small, for example of the U$4 billion annual spend by the mining industry in the country, only 13 per cent goes to locals according to the African Development Bank (AfDB) 2019 report,” ZAM vice-president Fronscen Haloba says.
President Hakainde Hichilema’s speech during the opening of Parliament has set the tone of what is expected in the national budget.
Among the areas the president touched is the protracted process of resolving outstanding issues at Konkola Copper Mine (KCM) and Mopani Copper Mines (MCM) of which the KCM issue is being resolved.
President Hichilema maintains that going forward the impasse in the mines should not be resolved in courts but through negotiations.
“We reassure our citizens that the government is working hard to resolve all the outstanding issues at all mines including Mopani,” he says.
To ensure an attractive mining sector for increased investment and output, he says his administration is undertaking regulatory and structural reforms that will contribute to the increase and diversification of mineral production in the country.
The government is establishing a minerals regulatory commission to superintend over the sector, promote investments and ensure the country gets maximum benefit from its mineral resources.
To support investments and diversification in exploration, mining and processing of minerals, he says the Government will embark on a national geological mapping exercise of the country.
“This will enable us to get accurate data on our mineral resource endowment. The government is formalising artisanal and small-scale mining to increase participation of our citizens in the mining sector,” Mr Hichilema says.
It is, therefore, hoped that under the 2024 budget the government will come up with measures to boost copper production while encouraging diversification within the mining industry.
The discovery of gold, lithium, sugilite and now graphite should give the government and other players an impetus to galvanise the mining industry and position it for growth thus contributing to the country’s economic growth agenda.